Posted on 09/30/2011 8:50:12 AM PDT by SeekAndFind
Herman Cain's supporters know their part by heart. On the campaign trail, at the point in Cain's stump speech when he begins to discuss his plan for economic growth, they're always ready to join the chorus: "Nine! Nine! Nine!"
They're referring, of course, to the Republican presidential candidate's proposal to throw out today's tax structure and replace it with a 9 percent income tax, a 9 percent business tax, and a 9 percent national sales tax. Cain would eliminate capital gains taxes, the payroll tax and the estate tax.
For Cain, a Georgia businessman, 9-9-9 is a perfect platform. It's specific, but it doesn't bury people in details, like Mitt Romney's 59-point, 160-page plan. And it's not a vague promise like Rick Perry's look-what-I-did-in-Texas position. To a lot of voters, 9-9-9 is an enormously appealing proposal that is easy to grasp.
It's audacious, too. "I had a kind of pivotal moment in this," says Rich Lowrie, the head of an investment firm in Cleveland who serves as Cain's top economic adviser. "I was with Mr. Cain and I asked him, 'How bold do you want to be?' and he leaned toward me with his big, booming voice and said, 'BOLD.' "
So bold it was. But is 9-9-9, for all its boldness, a good idea?
I talked with a number of conservative economic policy experts who don't want to take sides in the campaign and thus asked to remain anonymous. They found some important things to like in 9-9-9. They favor its low rates, and they like its elimination of various types of double taxation. Most agree it would stimulate growth and create jobs, at least in the short run.
But they have two serious objections. The first is that 9-9-9 might not raise enough money to fund the government even if it creates growth and federal spending is reduced. Over the years, the government has taken in tax revenues equal to about 18 percent of gross domestic product. "I'd be surprised if 9-9-9 raises as much money as current policy," says one expert. "I'd be really surprised if it raises 18 percent of GDP."
Cain's advisers have put together a detailed analysis, or score, to argue that 9-9-9 would be "revenue neutral," that is, would raise the same amount as today's system. "We used 2008 as our baseline, and not accounting for any growth effect, it would have generated to the penny the same revenue," says Lowrie. So far, though, the numbers have not been crunched by many experts outside the campaign.
The second objection is that 9-9-9 would add a national sales tax on top of current income and business taxes, and would thus give Congress another tax to raise. Why couldn't 9-9-9 become 12-12-12? Or 15-15-15? The rates would still seem fairly low. "In the long run it leaves the door open for politicians with the wrong motives to push it upwards, and then we're stuck with something worse than what we had before," says a second expert.
"All taxes over time tend to rise to their highest sustainable point," says a third expert. "So one of the general things you don't want to do, if you're concerned about limiting the size of government, is to introduce a whole new type of tax on top of the current structure."
Lowrie rejects the argument. First, he points out that 9-9-9 would eliminate some major taxes, like the payroll tax. As for the sales tax, he argues that some politicians will always want to raise taxes, and "I don't think they would be any more likely to raise this." Finally he believes that citizens' movements like the Tea Party will keep up the pressure against tax increases. Still, the fact remains that under 9-9-9, there would be a new tax on top of existing taxes.
This week Cain's team came to Washington to explain the plan to conservative economic analysts at Americans for Tax Reform, Club for Growth and other institutions. Those experts are starting from scratch; they haven't really seen anything like Cain's plan before. And for all the problems they have with it -- they're also flummoxed by Cain's inclusion of "empowerment zones" for inner cities -- they still admire Cain for trying to find a new solution to today's problems.
"It's not an entirely coherent set of proposals," says a fourth expert. "I do worry about the end game. But I hate to rain on it because there's no perfect tax system in the world, and this is another person stirring the tax reform debate, and that's a good debate to have."
Byron York, The Examiner's chief political correspondent, can be contacted at byork@washingtonexaminer.com.
As it eliminates the payroll tax it would more than compensate for the sales tax as it is based on consumption and rhe poor simply don’t consume as much as those further up on the economic ladder. Businesses would boom b/c of the lower tax rates which would increase tax revenue. As a result of economic growth, more jobs would be available thus solving the employment crisis.
for the Sake of clarity can we do some math on this 9-9-9 tax.
Farmer Sells 1000$ worth of cattle to Butcher. Is 9% added.
Butcher converts 1000$ worth of Cattle into 1500$ worth of Meat and sell to Grocer. is 9% added.
Grocer Sell 1500$ worth of Meat to Consumer for 2000%. Is 9% added.
OR in other words
1000$ of cattle at 9% tax is 90$ ?
1500$ of Meat at 9% tax is 135$ ?
2000$ of Groceries at 9% tax is 180$ ?
How much tax is collected. 405$ ??
I like 9-9-9 provided it is a gateway to irrevocably eliminating the IRS and having a fair consumption tax within a short period of time. The real risk in having a IRS marginal income tax alongside a consumption tax before we eliminate the IRS althogether is that a subsequent Dem Congress will never agree to eliminate the IRS and we may end up with worst of both worlds with a constant ratcheting up of marginal income tax rates by Dems alond with a national sales tax. A bit scary.
I like Cain too. I am in Alabama and I think it will be decided by the time our primaries occur. I will gladly vote for whoever is running against Barry.
This 999 plan is bullshit.
Like the original XVI Amendment, it began as one thing and morphed into something else. Mainly the 16th began as a tax on corporations that were and still are afford certain protections under Federal and State laws (including persons deriving their livelihood from taxpayer monies). Private businesses were not originally affected by the 16th including private wage earners, that was redefined/came/morphed later.
People need to understand their unalienable rights and one is the pursuit of happiness where working or having a job is not a gain in society but just a right, and has nothing to do with income
VAT is a socialistic plan to confiscate funds for redistribution, the bureaucracy needed for accounting alone means it doomed from the start.
A national tax in lieu of the 16th makes some sense if only because it is spread among everyone during consumption. The income portion of the 999 plan is crap and based on current overall taxation in part.
Starve the beast.
Again, the same critic applies to the existing system. We currently exempt whole groups of people from paying taxes.
Under 9-9-9 they will at least pay something. So in the existing system you get the same flaws the critics complain about plus a whole lot more flaws.
No 9-9-9 is not perfect. It only completely better then what we have now or anything the other candidates have come up with. 9-9-9 has the advantage over all these "perfect" plans the critics come up with. 9-9-9 is politically doable.
For the sake of clarity, you could try being accurate.
9-9-9 would not tax any of that because food is exempt. But if it were not, it would only tax the groceries. The final sale, not each step of production.
Right now those items ARE taxes at the current 35% Business tax rate since each business has to pay it taxes out of profits generated in each sale. SO 9-9-9 would actually reduce the tax burden on these items
Absolutely incorrect.
Our current tax system with it myriad credits and deductions does that. MORE types of taxes does not add any such opportunity to "tinker" with rates.
You can do the exact same think you complain about in our current code. NOTHING is there to stop the Political Class from doing that tinkering right now.
So again your critic is without merit.
9-9-9, in fact, seriously reduces the political classes ability to tinker since it is transparent and everyone pays. There is no ability to pit one political group against another by demagoguery like "making the rich pay their fair share" or to write breaks into the code for fat cat lobbys
There is a much greater opportunity to tinker with the current tax system with it mind numbing complexity and opaqueness then there would be in the relatively transparency of a 9-9-9 system
RE: A business tax is just a hidden sales tax. In other words, there would be a 9% personal tax and an 18% sales tax
Just remember we already have a 35% CORPORATE TAX. THAT is a business tax, the second highest in the developed world.
Then why did he not do it with a Democrat super majority in both houses of Congress from Jan 2009 to Jan 2011?
Again the critics are just looking for things to complain about, not actually thinking through their complaints
In any case, any kind of tax reform is going to be politically difficult even if the Democrats get completely nuked in ‘12. That would certainly help, of course. I see the end of the Democrats as we know it as being akin to burning down the neighborhood’s crack house.
The same criticism applies to an even greater extent in the current tax system. 9-9-9 eliminates many of those flaws.
What you want is a perfect system with out any flaws at all. No such thing exists. You are making the perfect the enemy of the good.
By demanding perfection in any replacement tax system you are, in fact, arguing for the maintenance of the status quo since no replacement system will be perfect enough for you.
What stops the current political class from doing that very thing under the existing tax code?
The same political and economic pressure that prevents the Congress from simply hiking tax rates when ever it feels like now, would apply to even a great extent in a 9-9-9 system.
Everyone pays so everyone knows any tax hike means they pay more. Under 9-9-9 the is no more illusion that someone else is paying for your "help" from the Government
YOUR COMMENTS AND CONCERNS AND CRITIQUES OF THE 9-9-9 PLAN ARE MOST WELCOME HERE.Even though you don't get to dictate what is welcome and what isn't, introducing a sales tax in conjunction with an income tax, at whatever the rate. sounds like an Obama/Progressive's dream come true.
My guess is it's the beginning of the end of Herman Cain's presidential run.
This adds an entirely new tax on top of the taxes we already have.
It’s insane to agree with this.
The issue is spending, folks. Control spending. Why is it that conservatives, who just a few short weeks ago were screaming bloody murder at increasing taxes, are not because of their “flavor of the month” candidate have jumped on the “let’s increase taxes” bandwagon.
I have absolutely no desire to give politicians another tax, and will fight it to the grave.
The only way to institute a national sales tax is to ratify a constitutional amendment that on the same day (1) repeals the 16th amendment tax, (2) forbids Congress ever enacting a legislative income tax of any kind, (3) and institutes the particular type of sales tax desired with a set LIMIT on its size.
Anyone not for the preceding paragraph is simply bending over for tax-loving politicians.
I don’t know. Maybe I’m a simpleton, but for us, it would mean a HELLAVA lot less paid in income tax. And if I spend $50 and only have to pay $4.50 in taxes on that amount, I’m ok with that.
If we eliminate all the special favors and tax loopholes, I feel it would allow incomes to rise dramatically.
How about the “earned income” tax credit? If it abolishes that type of crap as well ...I’m ALL for it!! Getting pretty sick of seeing people who pay no taxes getting tax refunds!!
ping
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.